Tuesday, 30 November 2010

Sterling vs Euro at 2 month high into December

30th November 2010
Good morning. Sterling vs Euro rates hit a fresh 2 month high yesterday, as fears grow that other EU nations may also require help, as Ireland did. This speculation has weakened the Euro, creating some great opportunities for those that need Euros. Rates at 08:30am are as follows:

  • GBP/EUR 1.1870
  • GBP/USD 1.5561
  • GBP/AUD 1.6169
  • GBP/NZD 2.0886
  • GBP/CAD 1.5859
  • GBP/CHF 1.5495
  • GBP/ZAR 11.055
  • GBP/JPY 130.51
  • GBP/NOK 9.601
  • GBP/HUF 335.95
  • EUR/USD 1.3089
EU fears weaken Euro, but the pound is still weak

Whilst negative sentiment towards the Euro has weakened the single currency pushing GBP/EUR rates to a 2 month high, against the US Dollar the pound fell to a 2 month low. This illustrates the fact that the pound is still weak, and it's only Euro weakness that's causing the rise in rates.

Ongoing speculation about whether more euro zone nations including Portugal and Spain will require bailouts will continue to sting the euro which may boost the pound versus the single currency.

Signs the UK economic recovery will be subdued are also expected to limit any big upside in sterling for the moment however. Many of you who need to buy Euros may be hoping that rates will continue to rise. While the problems in the Eurozone remain, this could be the case. It's important to note however that there is poor UK data, and given the EU is our largest trading partner, problems could migrate to the UK.

If you need to buy Euros...

At some point rates will fall back away, probably when markets are calmer about the EU countries. If you need to buy Euros then consider fixing the rate at a 2 month high using a Forward contract.

Just over a month ago rates were at €1.11, and we've seen a remarkable 7 point increase purely to do with the debt problems in Ireland. €150k is now £8000 cheaper than when rates were lower, and many clients who don't want to risk rates falling are taking advantage now. It wouldn't take much for rates to retract to the €1.11 low of a month ago.

If however you wish to take the gamble that rates will continue to rise, then you should consider placing a Stop Loss order. This is where you place an order to buy should rates fall below a pre-agreed level. In this way you can continue to aim for a higher rate, but have a worst case scenario should exchange rates fall.

To discuss our commercial rates and the types of contract we offer, contact us today for a free consultation. Our rates are up to 5% better than the banks can offer, and so the savings can be considerable. No commission, expert market knowledge, and commercial exchange rates. Get in touch now.